The United Nations International Fund for Agricultural Development (IFAD) via the newly launched Private Sector Financing Programme (PSFP) is set to boost rural businesses and smallholder farmers after it loaned Agric Firm, Babban Gona, $5 million.
The PSFP is focused on increasing private investment in small and medium-sized enterprises (SMEs), farmer organizations and financial intermediaries servicing small-scale farmers, which are often neglected by investors.
The initiative is also aimed at addressing the rising hunger and poverty levels in the poorest countries of the world.
Babban Gona, on its part, has a strong background in successfully moving small-scale farmers from subsistence to a more market-orientated model, hence the support.
The support will aid 377,000 small-scale rice and maize producers in Nigeria with a comprehensive package of training, quality inputs, and marketing services. It will also enable it to store and sell the harvest on behalf of its farmers when prices are higher.
The loan which is IFAD’s first loan to a private sector entity will also help facilitate the creation of 65,000 jobs for women and 66,500 jobs for youths by 2025, in addition, stimulate larger contributions from other investors and help Babban Gona meet its target to raise $150 million to reach millions of small producers.
Speaking, President of IFAD, Gilbert F. Houngbo, stated, “We can end poverty and hunger. But to achieve this, we urgently need to stimulate more private sector investments to rural areas and unlock the immense entrepreneurial potential of millions of rural SMEs and small producers.”
“With access to capital, they can attract more investors and partners, grow their businesses and create employment opportunities, especially for young people and women,” he added.
Houngbo expressed that the lack of financing and access to financial services had prevented rural SMEs and small-scale farmers from harnessing opportunities offered by a growing demand for more diverse and nutritious food globally.
He noted that even before the COVID-19 pandemic, financial service providers only met about 30 percent of the $240 billion that rural households required in their demands for finance.
According to him, the lending gap to agricultural SMEs was around $100 billion annually in Sub-Saharan Africa alone.
Explaining further, Houngbo stated that IFAD aims to mobilise $200 million for the PSFP from public, private and philanthropic sources to leverage a total of $1 billion in private investments adding that it will improve the lives of up to 5 million small-scale farmers.
“With growing hunger and poverty and the urgent need to make our food systems more sustainable and equitable, business as usual is not an option. We need to innovate now, this is why IFAD is creating new instruments to catalyse increased private sector investments to rural areas where they are needed most,” Houngbo stated.
The PSFP is part of IFAD’s wider ambition to increase its engagement with the private sector to reach millions of rural people and double its impact on eradicating hunger and poverty by 2030.